Interesting Economics

Previously on The Oil Drum, Stuart Staniford demonstrated how the system of interest on savings discourages long term thinking. But is this some intrinsic property of human nature? Or is it something we can change?

The alternative economics community has been studying questions like this for a long time, and much research has gone into what a sustainable economic system might look like. Far from being fundamental to who we are, the monetary systems we use today have evolved haphazardly over the years with no real over-arching design or guiding principles. It should come as no surprise that it has some undesirable properties. But just like our bodies, the more we learn about how they work the easier it becomes to see ways of changing them for the better.

This post will look deeper at the effects of charging interest, and present an alternative that has been widely deployed in practice – an alternative that promotes the long term over the short term.

If he has exacted usury Or taken increase — Shall he then live? He shall not live! If he has done any of these abominations, He shall surely die; His blood shall be upon him. (Ezekiel 18:13)

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